EU complaint made over £1.5b “unlawful aid” for Earl’s Court plan

In a formal complaint to the EU Commission, local residents have accused Hammersmith & Fulham Council of underselling the value of the Earl’s Court regeneration by not tendering the project when the land was sold to developers Capco in 2012.

Residents have lodged a formal complaint with the EU Commission claiming that figures published by Capco in an annual report in February 2016 show “the company valued the profit on a similar sized area of adjacent land at £1.274 billion”.

Dr. Richard Fordham who made the complaint on behalf of local resident, Keith Drew, writes in the official complaint that “Capco was chosen by the Council for the scheme without a public tender, in contravention of Government Guidance on the sale of public land.”

The complaint cites Article 107(1) of the Treaty on the Functioning of the European Union, which states that “any aid granted by a Member State or through state resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall be incompatible with the internal market” because it affects “trade between member states.”

The 22 acres of land occupied by the West Kensington and Gibbs Green estates were sold for £90 million to property developers Capco, however, campaigners are suggesting that this was part of the council’s decision not to tender the contract.

Despite numerous attempts to contact Hammersmith and Fulham council, they were unavailable for comment.

According to Dr. Fordham, “the council offered no logic for avoiding a tender process”. adding “the market was not tested; and many other well-qualified development companies in London and the EU were denied the opportunity of bidding for the land”, making it “impossible for the Council to prove that it obtained the best possible price.”

Campaigners insist that since the land was sold without a tendering process, the council acted in “contravention of Government Guidance on the sale of public land”.

Referencing a financial viability assessment conducted in September 2012 by District Valuer Services (DVS), the total Earl’s Court scheme value was estimated at £12 billion. On top of this estimate, the Land Registry indicates that the “uplift in house prices in Hammersmith & Fulham between 2012 and 2016” will see the total scheme value increase to nearly £19 billion, despite the original council valuation of £8 billion in 2012.

As part of the Section 106 agreement with the council Capco are obliged replace 750 affordable homes demolished as part of the plans, with an additional 750 being built and funded as well. They are also responsible for “improvements to local amenities”, “a new primary school”, “cultural space” and a new five acre park.

Jonathan Rosenberg, the community organiser for community activist group, West Kensington & Gibbs Green Estates, said that the Section 106 agreement amounted to letting the “council off the hook.”

A spokesman for Capco said that they “firmly believe” that the complaint made to the “European Commission is spurious and without any basis.”

“We agreed a proper contract with the council”, Capco added, “which was entered into freely, and which was reviewed and agreed by the Department of Communities and Local Government, which is the always the normal procedure.”